The High Court’s decision in Re A Company (Application to restrain presentation of
petition) [2020] EWHC 1406 (Ch) (“Re A Company”) has indicated that the Corporate
Insolvency and Government Bill (the “Bill”), despite not yet being in force at the time of the application (the Bill has since been granted Royal Assent on 25 June 2020), is to be
treated as though it is active legislation in relation to winding up petitions, in anticipation of the legislation obtaining royal assent. It is apparent that the Court has used its right to take into account even the possibility of a change in the law, in order to make clear that
creditors have little to gain from presenting COVID-19 related winding up petitions in
advance of the Bill coming into force.
The facts
Re A Company concerned a High Street retailer (the “Retailer”). The Retailer’s landlord
had served a statutory demand on 27 March 2020 on the grounds of unpaid rent and
service charges, following which a winding-up petition was submitted. Subsequently, the
Retailer applied to the court for an injunction to prevent their landlord from being able to
present the winding-up petition to the court on the basis of the Bill. The landlord had
presented the winding-up petition against the Retailer on 1 May 2020.
The Bill as currently drafted (although not enacted) states that any winding up order of a
company presented between 27 April 2020 and 30 June 2020 (and therefore inclusive of the 1 May 2020 date that the landlord presented the petition) will be void, where it is in respect of a statutory demand served in the period between 1 March 2020 and one month after the coming into force of Schedule 10 of the Bill. The only exceptions to this are where:
(a) COVID-19 has “not had a financial effect on the company”; or
(b) the reasons by reference to which the relevant ground(s) applies would have
arisen, even if COVID-19 had not had any financial effect on the company.
In handing down judgment, Mr Justice Morgan noted that there was a high probability that the provisions of the Bill voiding the winding up of a company would be enacted, in “more or less” their current form. In particular, Mr Justice Morgan referred to a number of ministerial statements, which he held to be indicative of the commitment of the UK
Government as to the Bill’s enactment. As a result, Mr Justice Morgan found that the court could use their power to take into account the possibility of a change to the law, given the likelihood of it imminently being granted royal assent, in determining whether to grant relief to the Retailer.
